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Many investors are interested in stocks that are selling below the company's underlying book value. Book value is calculated by subtracting a company's total liabilities from its total assets. When there is some negative news about the company, some stocks may sell at or below its book value. In these scenarios, some investors sell the stock as soon as the negative news is published and often the book value is not analyzed from the balance sheet. However, these stocks are potentially a good buy for long-term investment provided the company has strong pipeline with increase in revenue and profitability.

Price-to-book ratio is used to compare a stock's market value to its book value and it is calculated by dividing the stock price by the book value per share. The higher the price-to-book ratio, the higher the premium the market is willing to pay for the company above its assets. A low price-to-book ratio may signal a good investment opportunity, as book value is an accounting number and rarely represents the true value of the company. In this article, I will focus on the top 12 large-cap stocks that are selling below the book value. Use this list as a potential starting point for your analysis. These stocks are selling below book value and are screened based on the following criteria:

  • Security Type: Common stock
  • Market Cap: Greater than $1.16 Billion
  • P/E (Next Year Estimate): Less than or Equal to 15.0
  • Price/Book Ratio: Less than or Equal to 1.0
  • EPS Growth (Projected Next Year vs. This Year): Greater than or Equal to 15.00%
  • EPS Growth (Projected This Year vs. Last Year): Greater than or Equal to 15.00%


The following table shows the top 12 large-cap stocks that are selling below book value:

(click to enlarge)

1. Genworth Financial (GNW): Genworth is a financial security company. It provides insurance, wealth management, investment and financial solutions. Genworth has a market cap of $2.92B. Genworth is currently trading around $5.95 with a 52-week range of $4.80-$12.55. Revenue growth for the last quarter is 0.77% when compared to same quarter prior year. Projected EPS growth for this year is 126% when compared to last year. Next year P/E estimate is 3.6 and its price-to-book ratio is 0.17. The stock has -9.16% price performance for the year 2012.

2. Bank Of America (BAC): Bank of America is a financial institution, serving individual consumers, small and middle market businesses, corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. Bank of America has a market cap of $89.11B. Bank of America is currently trading around $8.27 with a 52-week range of $4.92-$12.71. Revenue growth for the last quarter is -17.56% when compared to same quarter prior year. Projected EPS growth for this year is 6060% when compared to last year. Next year P/E estimate is 7.8 and its price-to-book ratio is 0.42. The stock has 48.74% price performance for the year 2012.

3. Regions Financial (RF): Regions provides traditional commercial, retail and mortgage banking services, as well as other financial services in the fields of investment banking, asset management, trust, mutual funds, securities brokerage, insurance and other specialty financing. Regions has a market cap of $9.53B. Regions is currently trading around $6.75 with a 52-week range of $2.82-$7.45. Revenue growth for the last quarter is -8.92% when compared to same quarter prior year. Projected EPS growth for this year is 227% when compared to last year. Next year P/E estimate is 8.7 and its price-to-book ratio is 0.67. The stock has 56.98% price performance for the year 2012.

4. Popular Inc. (BPOP): Popular is a diversified, publicly owned bank holding company. The company operates in two markets: Puerto Rico and mainland U.S. Popular has a market cap of $1.86B. Popular is currently trading around $1.81 with a 52-week range of $1.08-$3.23. Revenue growth for the last quarter is -13.24% when compared to same quarter prior year. Projected EPS growth for this year is 23.75% when compared to last year. Next year P/E estimate is 6.4 and its price-to-book ratio is 0.48. The stock has 30.22% price performance for the year 2012.

5. Jetblue Airways (JBLU): JetBlue is a passenger airline that operates primarily on point-to-point routes with its fleet of 120 Airbus A320 aircraft and 49 EMBRAER 190 aircraft. JetBlue has a market cap of $1.32B. JetBlue is currently trading around $4.65 with a 52-week range of $3.40-$6.38. Revenue growth for the last quarter is 22.17% when compared to same quarter prior year. Projected EPS growth for this year is 81.03% when compared to last year. Next year P/E estimate is 7.1 and its price-to-book ratio is 0.74. The stock has -10.58% price performance for the year 2012.

6. Southwest Airlines (LUV): Southwest Airlines operates a passenger airline that provides scheduled air transportation in the U.S. Southwest Airlines has a market cap of $6.21B. Southwest Airlines is currently trading around $8.09 with a 52-week range of $7.15-$12.44. Revenue growth for the last quarter is 28.62% when compared to same quarter prior year. Projected EPS growth for this year is 59.53% when compared to last year. Next year P/E estimate is 7.9 and its price-to-book ratio is 0.87. The stock has -5.49% price performance for the year 2012.

7. Suntrust Banks (STI): SunTrust is a diversified financial services holding company whose businesses provide a range of financial services to consumer and corporate clients. SunTrust has a market cap of $13.14B. SunTrust is currently trading around $24.42 with a 52-week range of $15.79-$28.85. Revenue growth for the last quarter is -1.11% when compared to same quarter prior year. Projected EPS growth for this year is 72.48% when compared to last year. Next year P/E estimate is 9.1 and its price-to-book ratio is 0.65. The stock has 37.97% price performance for the year 2012.

8. DIRECTV (DTV): DIRECTV is a provider of digital television entertainment in the U.S. and Latin America. DIRECTV has a market cap of $32.79B. DIRECTV is currently trading around $48.48 with a 52-week range of $39.82-$53.40. Revenue growth for the last quarter is 12.72% when compared to same quarter prior year. Projected EPS growth for this year is 26.08% when compared to last year. Next year P/E estimate is 9 and its price-to-book ratio is -10.68. The stock has 13.38% price performance for the year 2012.

9. Rowan Companies (RDC): Rowan is a provider of international and domestic contract drilling services. Rowan has a market cap of $4.28B. Rowan is currently trading around $34.60 with a 52-week range of $28.13-$42.21. Revenue growth for the last quarter is 31.95% when compared to same quarter prior year. Projected EPS growth for this year is 124% when compared to last year. Next year P/E estimate is 8.7 and its price-to-book ratio is 0.97. The stock has 14.08% price performance for the year 2012.

10. Coeur D'Alene Mines (CDE): Coeur is a silver producer with gold production and has assets located in the U.S., Mexico, Bolivia, Argentina and Australia. Coeur has a market cap of $1.94B. Coeur is currently trading around $21.60 with a 52-week range of $19.30-$32.09. Revenue growth for the last quarter is 18.94% when compared to same quarter prior year. Projected EPS growth for this year is 64.82% when compared to last year. Next year P/E estimate is 7.8 and its price-to-book ratio is 0.9. The stock has -10.52% price performance for the year 2012.

11. Morgan Stanley (MS): Morgan Stanley is a global financial services firm that, through its subsidiaries and affiliates, provides its products and services to a group of clients and customers, including corporations, governments, financial institutions and individuals. Morgan Stanley has a market cap of $34.05B. Morgan Stanley is currently trading around $17.21 with a 52-week range of $11.58-$26.49. Revenue growth for the last quarter is -10.03% when compared to same quarter prior year. Projected EPS growth for this year is 16.43% when compared to last year. Next year P/E estimate is 7 and its price-to-book ratio is 0.56. The stock has 13.75% price performance for the year 2012.

12. Nabors Industries (NBR): Nabors Industries is a land drilling contractor. It is also a land well-servicing and workover contractor in the U.S. and Canada. Nabors Industries has a market cap of $5.3B. Nabors Industries is currently trading around $16.62 with a 52-week range of $11.05-$32.41. Revenue growth for the last quarter is 37.63% when compared to same quarter prior year. Projected EPS growth for this year is 44.93% when compared to last year. Next year P/E estimate is 6.6 and its price-to-book ratio is 0.84. The stock has -4.15% price performance for the year 2012.

Source: Top 12 Large-Cap Stocks Selling Below Book Value

Additional disclosure: I may initiate a long position in the above mentioned stocks over the next 72 hours.